Philippines BPO: Ready for the Deluge - Chalre Associates · About Training Philippines BPO: Ready...

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Philippines BPO:Ready for the Deluge

This report is property of ChalréAssociates. It may not be circulated, quoted, or reproduced for distribution without prior approval from ChalréAssociates. This material was used by ChalréAssociates during an oral presentation; it is not intended to be a complete representation of all issues discussed.

Presented by: Richard Mills CFAChairman, Chalré Associates

Who is Doing What in Philippines

Here is some data on what real decision makers are doing.

Later we will discuss the conclusion from their actions.

Philippines BPO: Ready for the Delugeby Richard Mills

Characteristics:• Period of Commitment – Early Locator• Growth Outlook - Targeting 9,000 employees by end of year• Services Provided - IT, BPO, call center, (broad range)• Working Environment - Low pay, long working hours• Locations – Downtown Core (just starting to move outside the

core later this year)

Current Employment - 7,000

AccentureWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Early Locator but slow to start• Growth Outlook - Targeting 6,000 employees by end of year• Services Provided - IT, BPO, call center (Daksh)• Working Environment - Low pay, long working hours• Locations – Eastwood (Metro Manila), early plans to build campus

facility

Current Employment - 3,000

IBMWho isDoingWhat in Philippines

Current Employment - 600

GXS (formerly GE Info. Sys.)Who isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook - Targeting fast growth from this point forward• Services Provided – IT, application maintenance, tech support• Working Environment - balanced• Locations – Downtown Core

Current Employment – 1000

CitigroupWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook - Targeting fast growth from this point forward• Services Provided – 3 separate facilities managed separately (IT,

BPO)• Working Environment - balanced• Locations – Downtown Core

Current Employment - ~900

AIG, AIUWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook - Targeting fast growth from this point forward• Services Provided – IT, application maintenance, tech support• Working Environment - balanced• Locations – Downtown Core, Alabang

Current Employment - ~4000

DellWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook – fast growth• Services Provided – call center• Working Environment - Difficult• Locations – Captive Center in Mall of Asia

HSBCWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator (less than 2 years)• Growth Outlook – Targeting 3000 by end of year• Services Provided – mainly call center, branching out• Working Environment - Balanced• Locations – Started in core, Build custom facility

SafewayWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook – Targeting 400 by end of year• Services Provided – application support, development• Working Environment - Balanced• Locations – Downtown Core

Deutsche BankWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook – Targeting 500 by end of the year• Services Provided – Financial analysis support to world-wide

CFO’s• Working Environment - Balanced• Locations – Downtown Core

ChevronWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Early Locator• Growth Outlook – Targeting 560• Services Provided – Finance & accounting, SAP support, HR • Working Environment - Balanced• Locations – Downtown Core

Telus International / AmbergrisWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Early Locator• Growth Outlook – Targeting 6000 by end of the year• Services Provided – call center (Ambergris), IT (Equicom)• Working Environment - Balanced• Locations – various Metro Manila locations

Maersk LogisticsWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook – Targeting 900 by end of the year• Services Provided – BPO• Working Environment - Balanced• Locations – Ortigas (Metro Manila)

Fluor DanielWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Early Locator• Growth Outlook – Targeting 1000 by end of the year• Services Provided – Engineering Design• Working Environment - Balanced• Locations – Alabang (Metro Manila)

Hewlett-PackardWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Early Locator• Growth Outlook – Targeting 1000 by end of the year• Services Provided – IT, BPO• Working Environment - Balanced• Locations – Downtown Core, Ortigas (Metro Manila)

SiemensWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook – Targeting 700 by end of the year• Services Provided – call center, BPO• Working Environment - Balanced• Locations – Eastwood

ConvergysWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator• Growth Outlook – Targeting 10,000 by end of the year• Services Provided – call center• Working Environment – call center• Locations – various throughout Philippines

ClientLogicWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Recent Locator (through acquisition)• Growth Outlook – Targeting 6000 by end of the year• Services Provided – call center• Working Environment – call center• Locations – various throughout Philippines

LearWho isDoingWhat in Philippines

Characteristics:• Period of Commitment – Early Locator• Growth Outlook – Targeting 800• Services Provided – automotive design• Working Environment - Balanced• Locations – Cebu (second major city)

Some othersWho isDoingWhat in Philippines

What Business Leaders Say:About BPO in Philippines

Let’s look at some conclusions and trends using India for comparison.

What Business Leaders Say:About EnglishBetter Communications Skills1. Better English Communication Skills 2. Neutral accent3. More Culturally Attuned to the West4. Customer Service Mind-Set

Conclusion:Anything with a customer interfacing component has

good results in Philippines.

What Business Leaders Say:About Staff Availability

Good Supply of Labour1. Good supply of junior level people2. Supply of senior management talent is constrained3. Better “take-up” in Philippines over India4. Perceptions about Filipino workers are positive

Conclusion:Keep your people longer in Philippines.

What Business Leaders Say:About Education

Better Liberal Arts, Not So for Technical Skills1. Better at Liberal Arts2. Not as Technically Skilled3. Less Advanced Degree Holders

Conclusion:Good “soft-skills.” Alleged to be less able at hardcore

technical professions.

What Business Leaders Say:About Staff Turn Over

Better Retention1. Less Competition for Employees2. Retention Agreements Deemed Enforceable

Conclusion:Keep your people longer in Philippines.

What Business Leaders Say:About Training

Unrealized Opportunity1. Focus on training is just beginning2. Successful BPO’s have aligned with universities for

training3. On-the-job-training (OJT) for university students is a

good method of hiring new graduates

Conclusion:Training partnerships work and they are there for the

taking.

What Business Leaders Say:About Salaries

Rates Are Holding (for Now)1. Industry agreements are in place that no one will

compete on price. 2. There is starting to be stronger competition on

incentives. 3. BPO salaries lower than call center.

Conclusion:Let’s pray for smart competitors rather than stupid ones.

Core Locations Who’s There?

1. Makati City - downtown core highest density of IT, BPO, call center2. Fort Bonifacio – extension of core attracting call centers and BPO3. Alabang – south of Manila AIG, Fluor, HSBC, Convergys4. Ortigas – east along EDSA Ambergris, HP, Emerson, Maersk5. Eastwood – outside the downtown core IBM, call centers

What Business Leaders Say:About Real Estate

Moving Out1. BPO/Call Center Sector is the main driver of demand 2. Supply of large blocks is now limited in the core 3. Innovative solutions – Build-To-Suit, malls,

warehouses4. Increasing rates but still the cheapest in Asia

Conclusion:Need to work with a real estate agent to figure out a

solution.

KEY INCENTIVES FOR IT LOCATORS1. Income Tax Holiday (ITH) or Exemption from Corporate Income Tax for four years, extendable to a maximum of eight years; After the ITH period, the option to pay a special 5% Tax on Gross Income, in lieu of all national and local taxes.2. Exemption from duties and taxes on imported capital equipment, spare parts, supplies, raw materials. 3. Domestic sales allowance equivalent to 30% of total sales.4. Exemption from wharfage dues and export taxes, imposts and fees.5. Permanent resident status for foreign investors and immediate family members.6. Employment of foreign nationals.

What Business Leaders Say:About Government

PEZA (Philippine Economic Zone Authority)

What Business Leaders Say:About Government

Government is no worse than others1. Concern about unclear regulations.2. Get to know the influential people.3. Get involved in CSR.

Conclusion:Worry more about your business rather than red-tape.

What Business Leaders Say:About Infrastructure

Competitive & Reliable

1. Ruthless Competition between Telecom Providers2. No Issue with Electricity, Water3. Traffic is no worse than India and somewhat better

Conclusion:Infrastructure is a non-issue.

What Business Leaders Say:About Lifestyle

More Comfortable for Expatriates

1. Gentler society2. Weekend recreational activities3. Night-Life - Entertainment, restaurants, shopping,

spas, live music, etc.

Conclusion:Most expatriates feel Philippines is a step up from India.

Repatriation is often problematic after 3 – 4 years.

What Business Leaders Say:About the Industry

Proven Viability, Early Stage of Maturity1. Direct Industry Employment is only 100,0002. Most companies are small3. Broad range of services but voice dominates4. New Entrants.

Conclusion:Worthwhile opportunity over the next 2-3 years.

What Business Leaders Say:About the Industry

Less Dynamic Business Environment1. Fewer Local Competitors (no InfoSys, TCS, Wipro)2. Service Providers not as well developed3. Less Competition Between Locations

Conclusion:Early stage opportunity.

Philippines is poised to grow the strongest of any outsourcing destination in Asia.

Reasons:1. India and China are too competitive (retention

problems, increasing costs, quality of new hires, etc.).2. Philippines can grow faster because pioneering work

has been done by India. 3. People are discovering Philippines

Regional Managers say:

What Business Leaders SayCompared with alternatives, Philippines is a Better Option TodayBetter PeopleBetter InfrastructureBetter Expatriate Lifestyle

Philippines as an Outsource Destination:What CEO’s Really Think

For: Business Processing Association of Philippines (BPA/P)

Presented by: Richard Mills CFA

Chairman, Chalré Associates

Richard Mills CFA

Chairman, Chalré Associates

Expert Panel Member:

Featured Columnist & Contributor:

Quoted as:-“the Asia Pacific expert” by CallCenter Magazine.- “Offshore Outsourcing Expert” ComputerWorld USA- “guru on outsourcing” by Dr. Michael Clancy, President of Philippine Business Leader’s Forum, Economist Intelligence Unit.

BackgroundInformationof the Presenter

Philippines BPO: Ready for the Deluge - Chalre Associates · About Training Philippines BPO: Ready...

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